New rules coming into force from 2020 to curb pollution produced by the world’s ships are worrying everyone from OPEC oil producers to bunker fuel sellers and shipping companies.
The regulations will slash emissions of sulfur, which is blamed for causing respiratory diseases and is a component of acid rain that damages vegetation and wildlife.
The global shipping fleet now consumes about 4 million barrels per day (bpd) of high sulfur fuel oil, but about 3 million bpd of that demand will “disappear overnight”, according to the average market forecast calculated by Norway’s SEB Bank. Most demand is expected to shift to marine gasoil, a lower sulfur distillate fuel.
Morgan Stanley predicts this will generate at least 1.5 million bpd in extra demand for distillate in the next three years, pushing up total distillate demand growth.
That, in turn, will drive up prices. Safer Fuel yet higher cost. Just a thought.
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